Labor settlement: find out the details of how it is done

Understand better how a labor agreement is made.

A labor settlement, also known as a contract termination, is a process that occurs when the employment relationship between an employee and a company comes to an end. This process involves a series of calculations and payments that must be made to ensure that the employee's labor rights are respected in accordance with current legislation.

Understanding all aspects of a labor settlement is essential for both employees and employers, ensuring that both parties fulfill their obligations and rights correctly and fairly. In this article, we will cover in detail what a labor settlement is, what the employee's rights are, how the calculations are made, and the deadlines involved.

What is a Labor Agreement?

The labor settlement is the set of severance payments due to the employee when the employment contract is terminated. This settlement must be made regardless of the reason for the dismissal, whether it is initiated by the employee, by the employer (with or without just cause) or by mutual agreement.

Workers' Rights in Labor Agreements

When dismissed from a company, the employee is entitled to receive a series of amounts, depending on the reason for the termination. The main components of the employment settlement are:

Salary Balance

The employee is entitled to payment for the days worked in the month of termination, calculated proportionally.

Prior Notice

The notice period may be compensated or worked. If compensated, the employer pays the amount corresponding to the notice period, which may vary between 30 and 90 days, depending on the length of service.

Accrued and Proportional Vacations

The worker is entitled to payment for accrued vacation (if not taken) and proportional vacation, plus the constitutional third.

13th Proportional Salary

The 13th salary must be paid in proportion to the months worked in the year of termination.

FGTS fine

In the event of dismissal without just cause, the worker is entitled to a fine of 40% on the FGTS balance deposited during the period worked.

FGTS withdrawal

The worker can withdraw the total balance of the FGTS, except in cases of dismissal for just cause.

Unemployment Insurance

If the termination is without just cause, the employee may be entitled to unemployment insurance, provided that he or she meets the requirements for such.

Other Funds

Depending on the contract and applicable collective agreement, there may be other severance payments to be made, such as outstanding bonuses or commissions.

Payment Deadlines

The deadlines for payment of severance pay are established by the Consolidation of Labor Laws (CLT). In general, payment must be made by:

• 10 consecutive days after the end of the employment contract.

Failure to comply with this deadline may result in fines for the employer.

Essential for workers

Employment settlement is a fundamental right of workers and a legal obligation of employers. It is crucial that both parties are aware of the rights and duties involved in the termination process. Proper compliance with these obligations ensures a fair and transparent transition, avoiding conflicts and guaranteeing the financial security of the worker during the transition period between jobs.

If you are going through a termination process, seek professional guidance to ensure that all your rights are respected and that the labor settlement is carried out appropriately.